Are Student Loans Counted as Part of Chapter 13 Debt Limits?

Are Student Loans Counted as Part of Chapter 13 Debt Limits?

An individual can file a Chapter 13 case if they have noncontingent, liquidated unsecured debts LESS than $336,900 and noncontingent, liquidate secured debts of LESS than $1,010,650. (these amounts are adjusted every few years)

Student loan debt, as with ANY debt, factors into the debt limits for Chapter 13 under 11 USC 109(e).

A client asked me this question thinking that because student loans were non-dischargeable perhaps that affected whether the debt applies to the Chapter 13 debt limits.

The only way the student loan (or any) debt would not count towards the unsecured debt limit in a Chapter 13 is if one of the following occurred:

They already had a judgment against you (in the event of a default in payments) and created a lien against assets sufficient to cover the amount of the student loan. In this case, that amount would count towards the SECURED debt limit (which as stated above is just over $1 million);

The debt is contingent, meaning that you don’t owe it unless some pre-condition occurs; or

The debt is unliquidated, meaning that there is no way to readily determine the amount owed.

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Attorney Mark Markus has been practicing exclusively bankruptcy law in Los Angeles, California since 1991. He is a Certified Specialist in Bankruptcy Law by the State Bar of California Board of Legal Specialization, AV-Rated by martindale.com, and A+ rated by the Better Business Bureau. Google Plus

One Comment

Hi Mark – this is interesting as we have been holding off even trying to file bankruptcy due to our student loan debt. We were told by several lawyers that we could not file ch 13 due to being over the 336k unsecured debt limit (due to student loans) and then do not qualify for ch 7 either because we make too much money. We have no idea what to do. So, it almost sounds like it is better to wait and have the student loan companies get a judgment so that the amounts are counted towards secured debt limits. We have been told to get someone who specialized in ch 11, but there is no way we can even afford that!